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1992 (1) TMI 305 - SC - VAT and Sales TaxWhether Government Order No. 159-Ind. dated 26th March 1971 and the amending Government Order No. 414-Ind. dated 25th August 1971 are orders of exemption referable to section 5 of the General Sales Tax Act 1962? Held that - Appeal allowed. To sum up G.O. No. 159-Ind. dated 26th March 1971 and G.O. No. 414- Ind. dated 25th August 1971 are exemption from payment of sales tax orders referable to the powers of the Government under section 5 of the Jammu and Kashmir General Sales Tax Act and that exemption covers the entire series of sales of the goods comprehended within it but that the exemption was available only for a period of five years from the date of commissioning of the industries and not for ten years. The benefit of the exemption under the said Government orders are also available in respect of the inter-State sales of the same commodities for a period of five years from the commencement of the commercial production.
Issues Involved:
1. Whether Government Order No. 159-Ind. dated 26th March, 1971, and Government Order No. 414-Ind. dated 25th August, 1971, are orders of exemption referable to section 5 of the General Sales Tax Act, 1962. 2. Whether the appellants are entitled to exemption from sales tax for ten years based on promissory estoppel. 3. The validity and impact of S.R.O. 448 dated 22nd October, 1982, on the exemption orders. 4. The applicability of section 8(2-A) of the Central Sales Tax Act to the appellants' inter-State sales. 5. The impact of S.R.O. 80 dated 12th March, 1982, on the exemption orders. 6. The applicability of section 8-B of the Jammu and Kashmir General Sales Tax Act concerning the collection and refund of sales tax. Detailed Analysis: 1. Government Orders as Exemption Orders: The court examined whether Government Order No. 159-Ind. dated 26th March, 1971, and Government Order No. 414-Ind. dated 25th August, 1971, are exemption orders under section 5 of the General Sales Tax Act, 1962. The court concluded that these orders are indeed exemption orders. The orders were made implementing Cabinet decisions and were intended to attract entrepreneurs to establish industries in Jammu and Kashmir. The court noted that the orders were duly authenticated and satisfied all the requirements of section 5, which does not mandate a notification but allows for a government order to grant exemptions. 2. Exemption for Ten Years on Promissory Estoppel: The appellants argued that they were entitled to a ten-year exemption based on promissory estoppel, citing the Finance Minister's speech and a government brochure. However, the court found no factual foundation for this claim. The court noted that the only references to a ten-year exemption were in non-binding documents and speeches, and no official government order or Cabinet decision extending the exemption period to ten years was produced. 3. Validity and Impact of S.R.O. 448: S.R.O. 448 dated 22nd October, 1982, was challenged on various grounds, including its ability to supersede the exemption orders. The court held that S.R.O. 448 did not and could not supersede the exemptions granted under Government Orders 159 and 414. The court reasoned that S.R.O. 448, which fixed the point of tax on the turnover in the series of sales, did not affect the exemption orders, which covered the entire series of sales of the goods comprehended within them. 4. Applicability of Section 8(2-A) of the Central Sales Tax Act: The court examined whether the appellants were entitled to exemptions under section 8(2-A) of the Central Sales Tax Act for their inter-State sales. The court held that the appellants were entitled to this exemption. The court reasoned that the conditions in the exemption orders were intended to identify the dealer and the goods, not to specify circumstances or conditions relating to the turnover. Thus, the appellants' inter-State sales were exempt from Central sales tax for five years from the commencement of commercial production. 5. Impact of S.R.O. 80: The court considered whether S.R.O. 80 dated 12th March, 1982, superseded the earlier exemption orders. The court concluded that S.R.O. 80 was prospective in operation and did not supersede the exemption orders. The court also noted that a subsequent government order (G.O. No. 54-Ind. of 1983) allowed industries to continue enjoying the earlier exemption benefits or opt for new incentives, reinforcing the view that S.R.O. 80 did not affect the earlier exemptions. 6. Applicability of Section 8-B of the General Sales Tax Act: The court addressed the issue of whether the appellants had collected sales tax and whether they were liable to refund any such collections under section 8-B of the General Sales Tax Act. The court left this question open, stating that it would need to be decided in separate proceedings if the State sought to invoke section 8-B. The court noted that the High Court had not considered this issue, and the assessment orders were regular orders, not under section 8-B. Conclusion: The court allowed the appeals to the extent that the appellants were entitled to exemption from sales tax for five years from the commencement of commercial production under Government Orders 159 and 414. The court also held that the appellants were entitled to exemption under section 8(2-A) of the Central Sales Tax Act for their inter-State sales. The court did not impose any costs.
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